Australia is facing its most challenging time in electricity markets. High prices and bills have placed enormous strain on household budgets and business viability. The current situation is unacceptable and unsustainable.
The approach to policy, regulatory design and promotion of competition in this sector has not worked well for consumers. Indeed, the National Energy Market (NEM) needs to be reset, and this report sets out a plan for doing this.
The ACCC’s package of recommendations is wide ranging, which also reflects the nature of the mandate given to it by the Inquiry’s terms of reference. Some recommendations can be readily implemented within existing market, industry and policy structures. Others are more ambitious and their development and implementation may be challenging in the absence of a commitment by all participants—governments, industry, regulators, policy makers, consumer bodies and consumers themselves—to move away from existing modes of thinking and practices.
These challenges should not prevent, or unduly delay, what we consider are necessary measures to restore affordability and Australia’s competitive advantage in electricity. The ACCC’s final report from the Retail Electricity Pricing Inquiry examines the many causes of problems in the electricity market and sets out 56 recommendations that will bring down prices and restore consumer confidence and Australia’s competitive advantage. These recommendations span the entire supply chain, focusing on four key areas:
1. Boosting competition in generation and retail
2. Lowering costs in networks, environmental schemes and retail
3. Enhancing consumer experiences and outcomes
4. Improving business outcomes.
Removing unnecessary costs for customers is a vital economic reform with at least two important economic benefits. First, it improves equity as low income households pay a much higher share of disposable income on electricity. They should not be paying more for electricity because of poor past decisions or inappropriate market behaviour. Second, our recommendations will boost our overall welfare as we avoid industries closing due to paying unnecessarily high electricity costs.
Significant gains can be made for consumers and businesses if these recommendations are adopted. The NEM can be restored to an efficient, fair and competitive market that works in the interests of end users.